nbc news that the u.s. could hit the country with missile strikes as early as tomorrow. discussions about a possible options coming days after what is now believed to be the syrian regime's use of chemical weapons against civilians. nbc's richard engel filing a report from southern turkey, near the syrian border. >> reporter: washington says this is not about regime change, that the united states doesn't want to get involved in syria's civil war, that this will simply be a punitive action so that the use of chemical weapons does not go unnoticed and unchallenged. >> there is no doubt who is responsible for this heinous use of chemical weapons in syria. the syrian regime. >> reporter: the leader of the free syrian army told us today he hopes three days of military strikes will just be enough to topple the regime, that it could weaken bashar al assad's grip on

power just enough that the syrian rebels will be able to finish the mission and actually drive him from power. and in order to do that, the leader of the free syrian army told us in conjunction with a western military action that the rebels will launch their own offensive. they have already begun to stockpile ammunition, some new ammunition has been arriving. they have confirmed to us the question now is what will that leave the united states and what will it leave syria, if bashar al assad is toppled. there are many different rebel factions who are operating in syria, only a few of them are friendly to the united states. richard engel, nbc news, in southern turkey. >> u.n. inspectors left their hotel today, headed to an unknown destination. we should note the u.s. stocks sold off big time yesterday. you see what happened there. dow was off over 1%. in asia overnight, take a look at what happened on this news. we have red arrows across the

board, the hang seng off 1.5%. and the nikkei off 1.5% as well. earlier european trading, a similar story, not necessarily as bad, but red arrows with the dax off a percent. and a quick look at the u.s. futures, we have some green arrows on our side of the pond, with the dow looking like it might open up 13 points higher, the s&p 500 up close to two points higher and the nasdaq up as well. then finally, the big issue that is moving all of this, energy and crude specifically. you can see wti crude up almost 1%. and been that -- >> we have not seen 110 in a while. >> in a long time. we'll be looking at the broader markets and the flight to safety in a minute. before we do all that, let's get over to scott, some of this morning's corporate stories. good morning, scott. >> thanks so much. number of media companies losing control of their websites yesterday after hackers supporting the syrian government breached an internet company

that manages many major site addresses. the hacked companies include the new york times, twitter and the huffington post. terrorism analyst roger cressey will join us more in the next half an hour. wall street journal reporting jpmorgan's fines related to the london whale are not expected to total between $500 million and $600 million. paper says the bank is in discussions with various agencies as part of a global settlement. in other legal news, the new york times reports u.s. regulators are preparing to impose a fine of $80 million at jpmorgan, relating to its dealings with retail customers during the recession. regulators are investigating reports that the bank sold an identity theft protection with false promises to credit card customers through a third party vendor. in another set of actions, the government is targeting the bank for flooding state courts with lawsuits that used faulty documentation to substantiate the amount owed by consumers. in other wall street news, merrill lynch reportedly agreed

to pay $160 million to settle a racial bias lawsuit. proceedings wound through the federal courts for eight years. the payout would be the largest sum ever distributed to plaintiffs in a racial discrimination suit against an american employer. the lawsuit was filed on behalf of 700 black brokers who worked for merrill. i guess we'll talk jpmorgan. might be remiss if we didn't mention this ft story, don't you think? >> go for it. >> $6 billion what the u.s. is demanding that jpmorgan chase to settle allegations it sold mortgage securities to fannie and freddie. who would buy anything back then. they are not going to do it at this point. they say, no, unclear what type of settlement, what number we're talking about, but probably in the -- >> start with a b. >> start with a b. more, i figure we might as well mention that. an ft story on jpmorgan. broader markets this morning, as you saw, up 12 points on the

futures, which we kind of had our day yesterday and some of the other -- like in asia, responding to what happened here. got us down to a two-month low. not quite in full correction mode yet, but this time around you combine taper fears with seems like it is weird when everything starts coming together to explain why the market has a reason to sell off. you go from where nothing can cause it to go down and people predict corrections for a year and nothing happens and then all of a sudden, out of nowhere, how did we not correct earlier? even europe could rear its head again, if you read mark grammarson. there is some things brewing and percolating over there. you going to gang up with me on your big fancy jacket today. >> i was thinking how hot i am. >> you are hot, with or without the jacket, which is why i don't

see why you need to wear it. what is your problem? >> this is the way it worked out. it is how i roll. >> it's how you roll. >> this is like the play girl edition of "squawk box." ♪ >> you don't think you need -- you have no idea what is going on below the desk. >> i know what is going on beneath my desk looking at you, which is why it is -- let's back track. >> you went there, man. >> this squawkward moment has been brought to you by joe kernen. >> we haven't had a squawkward moment in a while. >> i don't think we have it taped, we don't have a guy saying it, that we have an awkward moment. >> already part of it. >> does this feel at all to you -- >> over 110, we saw that, i want to leave the ten-year. the ten-year, we should be going -- let's -- this feels

good. this is not getting out of hand. the fed has not lost control. the globe is not pushing interest rates up in spite of the fed. it is not. these other things, worries about the taper. in fact, the durable goods number probably made it more likely that liesman will be right. maybe there won't be anything in september. >> yeah. but let's -- >> you look tan. they put too much makeup on you today, around here. did someone different do your makeup today? >> you don't think it looks good. >> it looks good, you look a little -- it is like they're catering your makeup to the time of the year. >> it is the end of summer, i should look rested, a little -- >> you look like you got a haircut. >> i did. a week ago. >> both you guys are high and tight on the hair situation. the dollar, quickly, going to be like this the entire show, the man show. >> yeah. >> that's why it is good to have a woman here. >> makeup too, by the way. >> good to have a woman here to cut some of this stuff off,

basically. unfortunately viewers will be exposed -- 133 on the euro. the yen on fast money, if you explain why has the yen gotten so strong, you know, the tumult and the syrian situation has worsened. >> we haven't talked about the yen much. >> it is weird. because yesterday it jumped yesterday. the yen, and obvious and then gold as well, we'll see if gold continues to move higher. back in a bull market, and up to 1424. time for the global markets, before ross westgate got back in time for all this action. monday, the london market wasn't even open. you were paying a little catch-up yesterday, right? >> yeah. yeah, we were here in london. it was also the last long weekend of the summer. you have yours coming up this weekend. red behind us today. another day of sell-off, another day of global risk aversion as we continue to watch events in

syria. british government saying david cameron tweeting today that the british government will table a u.n. resolution possibly later today on some military action in syria. that's just pushed stocks at the moment down to about the lowest levels of the session, around 8 to 1, advancers outpaced by decliners at the moment. how we stand on european equities, ftse 100, session lows for the xetra dax, off a percent. cac quarante down a quarter. up a quarter for the mib. taking a breakdown of the sectors right now. only two up. utilities and notable oil and gas are up 1.6%. that's because as you have been pointing out, brent is getting a little firmer, nymex this morning. we have been up one stage this morning with brent up to $116 a barrel, 11536. nymex, below 110. 109 for a year and a half. gold is firmer.

copper again still weaker following the comments yesterday, expect weak chinese demand to weigh on prices. one big focus for the uk, mark carney's first official speech as governor. he's doing it up in nottingham. he's doing it to a lunch of business men. the local chambers of commerce, the directors and it will be q & a as well. 1:45 london time. work that out, five hours behind in the u.s. first speech, q & a and about his commitment to extending this period, his guidance he's given and how long he can keep rates low. the message will be for him, we'll do everything to keep rates low and get out and invest. treasury yields at 2.73% right now. on that note, hand it back to you. >> okay, ross.

thank you. it is not about business news as much there are ramifications for what happens in the markets. that's why we're here. let's get more on the situation in syria, possible u.s. response. michael singh, managing director at washington institute for near east policy and former senior director from middle east affairs at the national security council and, michael, in thinking about the situation, i will ask every guest today what they believe to be the most appropriate path, because to me it looks like an absolute quagmire where no one at this point knows what the negative ramifications could be, don't know whether anything will actually be positive about it. i don't think anyone knows at this point. what would your approach be if you were the president at this point? >> you're right. these things are very unpredictable. military conflict is inherently unpredictable. if the united states intervenes, it is important that we get something out of it.

i think it would be a shame to intervene just for symbolic purposes, just to sort of show that our red line was real. if we're going to engage in risks politically and militarily that this entails, i think it is important that it drive towards some kind of solution in syria. i think we want that to be not necessarily a victory for the opposition, because the opposition includes lots of al qaeda affiliated jihadists, but a diplomatic resolution. you want to convince the regime that it can't win militarily and has to come to the table and negotiate its way out of this. >> we can't police obviously every horrific act perpetrated by the people around the world. tyrants around the world, but when it gets to this point where you would probably call this a war crime, wouldn't you? a civilian -- a use of gas on civilians. don't know why regime change is out of the question at this

point. but that's not something that we're going to try to affect. but any half measures as you said, if it doesn't dissuade him, he might do it again. he's done it multiple times already. michael, do you know when which division it was? i read if it was division four, then that was one that assad controls, but they're not even sure and there are some divisions that he may have much less control over in terms of what they do. do we know he okayed this? >> well, i certainly don't know. the u.s. may have intelligence. the regime forces are kind of a real mix of both regular forces under the regime's control, as well as some irregular forces who have come in under the sponsorship of say iran, islamic revolutionary core. we see these irregular forces composed of syrian alawites and hezbollah there as well, the lebanese terrorist

group/political group which is also fighting for the regime. not clear that bashar al assad is directing everything, but i think he's responsible for everything. i think that's what's guiding u.s. actions. >> when you say we got to get something out of it, mccain, who will be on later, senator, later in the show, says we should try to do something in terms of knocking out air power, assad's air power. that doesn't seem to be something that we're considering. we're going to look at some of the divisions that we think are responsible for the gas or maybe i don't know other sites, not specifically making the gas, because we don't want to release any of it by accident. would that be enough if we hit them pretty hard on the ground or do we need to do something with the air? >> i would say you have to first think of what is your objective. so often we get ourselves into trouble because we don't have a clear objective. and if you have an objective in mind, that objective should be to get the regime to the negotiating table with the opposition, you have to think about what are the tools you

need to do that. it is not just military. not just picking targets. it is using diplomacy as well. how do you strengthen the opposition, how do you ensure you're strengthing the right opposition because you want to drive this to a resolution that advances our interests. can't just be about defending the president's credibility or doing something for the sake of doing something. >> we're in that problem. we got to do something, we said we would. we already lost credibility and now don't want to lose more. michael what is the role of saudi arabia in all of this, who has been on the fence about how they're treating this? >> the saudis have been supporting the syrian opposition by all accounts. and there is a lot of worries that money from the gulf states is flowing to this jihadist opposition, which has been the best armed and most effective. i don't think our gulf state allies will stand up and applaud if we just lob a few cruise missiles into syria because it will be seen as, well, look, that's -- you're defending your red line, your credibility, but not defending what we see as a

strategic interest here in syria. you're sort of showing up and then leaving in a sense. i think that our allies are looking for much more of a leadership role, an active role from us and have been for some time. >> do you believe iran that they'll attack israel? >> i think both iran and assad have a strong incentive not to escalate, not to sort of draw the u.s. even further in, but -- >> threats, you know. they lose credibility. they don't do anything. it is an absolute, you know, an absolute mess with all the unintended consequences. do you think it will be better not to do anything? >> i don't think it would be better not to do anything. i think in many ways our inaction has helped produce a situation you have now. you can't just avoid the problems. >> there is little public support for -- that's our own issue as well, from iraq and afghanistan. and you don't want our own situation to -- to cause us to do something that precludes

helping these civilians that are basically probably worried about another gas attack. >> and you find low public support, you find low congressional support. and obama is going to need to contend with. there hasn't been a clear articulation of what we're going to achieve and how we're going to do it. i think once someone stands up and does that, then you can test the support that you'll get. >> michael, thanks for that reasoned analysis. we appreciate it. getting up early, though he's on the east coast. >> thank you. >> that was most recent analysis i've heard in a long time about having an objective as opposed to just sending a signal. >> largely symbolic. >> it feels like we have been forced into it. we'll have mccain on. he's railing against general dempsey, who says, you know, said let's show much reticence to do anything that it

emboldens -- in his view, emboldened these guys. all right, coming up, how twitter is learning from some of facebook's ipo mistakes. first, as we head to break, let's check on the national forecast with the weather channel's alex wallace. >> good morning to you. good morning, we're tracking some showers moving from the great lakes down into the mid-atlantic. you see what is happening now, rain to west virginia, right around the elkins area. try to move closer to the d.c. area. that's an area we'll be focusing on the for the rest of the day. the 50th anniversary of dr. martin luther king's i have a dream speech. we have the risk for some storms throughout the afternoon and the evening as some of the events will be taking place there. some storms could pack a punch. severe threat for d.c., norfolk, virginia beach area, back to roanoke as well. so damaging winds and hail accompanying those storms and we're still dealing with the heat in the middle of the country. big heat dome in place. temperatures 10 to 15 degrees above average here for us. that will put us back up into the 90s.

omaha, 98, minneapolis, the twin cities, 92 degrees there. scorcher for the middle part of the week. "squawk box" coming back in a bit. ♪ ♪ i've got something for you too. (announcer) fancy feast delights with cheddar. a meal that is sure to delight your cheese lover. now available in the classic form she loves. fancy feast. the best ingredient is love.

welcome back to "squawk box." time now for the executive edge, our daily segment focused on giving business leaders a leg up. we're going to try to do that right now, with this story. twitter hired ticketmaster's former ceo to spearhead an ambitious push into online

commerce. analysts say the move fuels speculation that the social network could move toward an ipo as soon as early next year. twitter put in place policies that restrict employees from selling stock on the private markets, keeping a lid on the price. twitter shares trade for $20 in the private markets. what do you think and more importantly, if they do an ipo, which we all expect them to, should they make a special offer to all twitter users? >> well, how many twitter users are there? not a billion. >> not a billion yet, but half a billion, i'm assuming. no? >> something tells me they won't do that. >> i don't know. i didn't know that's a curveball you're throwing me. i don't know. i was thinking about this in different ways, in more philosophical ways and i'm hoping twitter is not around in five years. i guess it will be. i don't want to be paul krugman who said the internet in 1998 would have no greater impact than the fax machine and we now

know the internet probably is slightly. but are we all still going to be doing this, tweeting every waking thought as if someone is interested. and andrew, what would -- i hope not, but i guess you can't go back, it is the toothpaste is out of the tube, genie is out of the bottle, rabbit is out of the hat, it depresses me that that's what we're going to be doing because everyone can be a star in hollywood, i guess. >> i thought you embraced -- >> no, they really haven't. they use it to send nasty stuff in. >> a lot of hate. >> a lot of anonymous haters. andrew, how do you monetize twitter exactly? i was reading in this -- >> sponsored posts. e-commerce, all of those links when people send out an amazon link, when people say that, you know, you got to go buy the

whatever, that's how people make -- >> 300 million active users. it will work. it is worth $10 billion, i think, and making half a billion a year already. >> they're making money already. >> nothing else, they have the luxury of seeing all the issues and the problems by the facebook ipo. they had a what not to do. mistakes not to make. >> we're not going back. people, every time anything happens, people have to weigh in on it and we have to hear everyone's opinion and 300,000 -- it is a great place to get -- even like coming in this morning, just to go to twitter and get the headlines. >> people say it is their own personal news feed. >> that's what it is. walmart announcing it will be offering health insurance benefits to u.s. employees domestic partners, including partners of the same sex. 62% of fortune 500 companies already offer domestic partner benefits. in june, the supreme court forced the federal government to

recognize same sex marriages in states where it is legal. a walmart spokesman says because the company operates in all 50 states, it wanted to develop a single definition of who is eligible for benefits and here is the curveball i will throw you. that, on the back of last week, when we heard that u.p.s. was actually not going to be offering benefits, at least to those who already have benefits, spouses who have benefits elsewhere. >> that's the curveball. even people talking about it was that a lot of people work at walmart, keep you at a certain amount of hours so your benefits aren't very good. don't even get health care. you share the health care, share the benefits you do have, but they're not that great anyway. i'm for it. i applaud them. i sent a message, they defunded the boy scouts because the scout leader can't be gay. caterpillar, the big -- to have the moxie to do that was great.

to take a stand there. this is good. and people are pleased with it. but you got to look deeper at what it means. don't know how many people it will affect, really. also, as you said, you got to be together a year, planning to stay together, get some -- >> hard to create the right -- >> i'm surprised only 62% of fortune 500s do this and how quickly that number is going to increase. >> and now -- now walmart, it may open. >> the story for michelle obama, schools around the country are dropping out of their healthier new federal lunch program after a year. the school saying so many students were turned off by the meals the cafeterias were losing money. $11 billion, that's the national school lunch program. that's what they reimbursed schools for meals served and gives them access to lower priced foods. they don't have exact numbers but have seen isolated reports of schools cutting ties with the

program. >> this flies in the -- your love for all things bloomberg. this is a prime example. what i always told you is when you take everyone's health on as your responsibility, that's when you decide you're eating pears for lunch -- >> not enough salt, that's the issue. >> the kids are not eating this stuff, which if you give me a plate of sprouts, i'm dumping it and they're going to the convenience store across the street and eating peanut m&ms. >> they should offer it, shouldn't they? >> i don't think they offer other stuff now. >> and joe is right, scott. they're not offering other stuff. >> it is the law unintended consequences. it sounds good. if we pay for all the obese people, you want to -- then it becomes our responsibility. but what about individual -- what about the parents making sure the lunches that they pack or that they instill into the kids that you don't eat the crap. if government --

>> that's most important. >> if government is going to decide that everyone's health is their responsibility, this is the kind of stuff you have to live. >> i don't know. it starts at home. i did a documentary on obesity. i went to a school in california where the kids were eating healthy stuff. but they were bringing it. but also serving it. if someone tries to force it down your -- that's where we draw the line. think if our cafeteria, i don't eat there, but think if all they were serving was kale or something or, i don't know. >> i'll have michaey kale shake moment. that's your executive edge. coming up, we should mark today because it marks the 50th anniversary of the march on washington and dr. martin luther king's famous "i have a dream" speech. a march is skecheduled through downtown washington.

there will be speakers leading up to a speech by president obama this afternoon.

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it's time to do everything better than before. the new blackberry q10. it's time. grateful dead. >> this is grateful dead right here? >> good morning. welcome back to "squawk box" here on cnbc. i'm -- if it was -- if -- you're a believer, basically. if it is a bieber song, you'll

nail it, right? >> or spears. britney. >> i thought she was too old for you. she's a past generation. >> she was sort of my generation. >> i'm joe kernen with -- >> along with miley, you know. >> you must be beside yourself. >> we could have made a -- >> no legitimate anchor, i thought about this, in the whole blogosphere media sphere twerked. and if one of us did that, if you were to twerk right now to that camera, you would make all the -- >> i adopt know how to twerk. i know how to twerp. >> you do. you invented that. if you were to twerk, it will make it on to all the morning shows. >> do it. >> you should. i'm not going to. but think about it. you're not going to do it. >> no. >> do we have a big foam finger and an itch to scratch? >> oh, man. >> this squawkward moment has been brought to you by andrew ross sorkin.

>> scott wapner in for becky quick. hopefully we'll get to the serious things happening today, but you don't have plans to, like, bring on people to say, you any to curse and dissparnlg ea each other and get into fights. >> you don't do that on this show, right? >> you want me to do some phone calls. >> can you do a show without instigating and people throwing mud at each other and causing all kinds of a ruckus. you're comfortable on a normal straightforward -- >> jerry springer financing. >> i know. chairs. >> that's who i am. >> you rose with activism. i wonder whether being there and sort of helping it along actually helped along the activism. you're part of the story, kind of. >> the activists have given us the story this year, right? >> yeah. >> all of them, really. >> and it is fascinating in a

way. it is one of the biggest stories of the year. >> journalistic gift. >> it makes the story that much more interesting. >> makes it more exciting, doesn't it? >> it does. you pretend you're not, you know, instigating, but i see you stirring the pot as it is happening. and i like it. >> thank you. >> back to our top story, and this is, scott, has global markets worried. we don't know what the ramifications could be. what do we do in syria in terms of intervention. a sell-off of 170 points yesterday. oil is back above 110 here and higher elsewhere. it is 109. was above. now 24 cents below 110. and it is even having an effect, i would say the ten-year is probably responding more to that durable goods number and maybe the prospect for a slowdown because of some of the other things. but the ten-year is down to

2.75. we were hoping for 3% number. it is all about geopolitical things. and that will never -- there will always be geopolitical concerns, i guess with this front and center. >> right. let's get to washington. john harwood is there, our chief washington correspondent. good morning, john. >> good morning. >> trying to understand what is going on here. let me show you the front page of the washington post right here. u.s. -- here it is, u.s. strike could pull nation into war, experts say. what is the calculus inside the white house now? >> the white house is trying to make the case that they are not aiming for regime change in syria. this is not an intervention intended to tip the balance. this is intended to be a punitive strike against the assad regime and show that you're going to pay a price if you use weapons of mass destruction, chemical weapons. the problem is that what you --

what happens after that. what is their response? do they try to provoke you again? do you have to hit them again? and how do you avoid inevitably seeking to resolve the outcome of the war? the administration is trying to show discipline. richard haass, the veteran diplomat and foreign policy strategist who served in both bush white houses has been making the point over and over this needs to be of limited duration, not an open ended commitment, but other experts on this kind of intervention say it is pretty hard to limit it once you get in. >> john, here is the -- we had a guest on just moments ago, who said you can't just try to send a signal. that the signal unto itself is not helpful. you have to have an end goal. what do you think the end goal is if there is one at all or are we just talking about sending a signal? >> well, we are just talking

about sending a signal. but that caution that you just quoted is what i'm talking about. the possible sy that if you send a signal, well, there are other people who send signals back at you. what if you don't achieve your objectives or if you miss. what if they decide to retaliate and dare you to strike again? how do you limit all of that? and what they're saying is this is a one off, this is a punitive strike, this is designed to reinforce the norm of the international community, which the president had said was a red line, that we don't permit the use of weapons of mass destruction, that it is dangerous for the world if we do that. and that's what they're trying to stand up and say, if the regime does this, we'll hit them. >> what is the timing right now? >> i think the timing is days rather than weeks. the british are taking a resolution of the united nations today which russia is expecting

to veto. calling for authorizing action to protect civilians in syria, condemning the responses. u.n. inspectors are still there, you have to wait until they leave the country because their safety would be endangered by strikes while they were there. you've got the president signalling that they're going to lay out some of the intelligence that led them to conclude with certainty that these weapons were launched by the assad regime. i think this will play out over a number of days, but i would be surprised if a week from now we're sitting here and it hasn't happened yet. >> it is weird to me that we are being so sort of hesitant to swing the favor of the conflict in towards the rebels. there are some people who think maybe we should have been backing the rebels and it is weird there are constituents of the rebels that are so odious that if assad ends up staying in

power, we're okay with that after he's used gas on civilians. it is weird we're not saying, this guy is clearly unacceptable at this point to stay in power. mccain will be on. he says he's met with the rebels and that they're not al qaeda and that -- that they're people we could work with. i think it is weird we're tiptoeing around the notion of regime change, with the idea that we could accept assad prevailing here. do we work with him -- if he stays in power, then we send an embassy back there after he's gassed his own people? >> the position of the united states is that he has to go. but the united states has taken the view, the administration has taken the view that you broke it, you bought it. if we get involved, having been involved in iraq and afghanistan, do we really want to be there for years?

do we really want to then become the overseer of syria if regime change happens. >> we're tiptoeing not to take sides here when one of the people, obviously this is a -- >> we have taken sides. we have taken sides. the question is do you try to intervene and use force decisively to take sides in that way? >> okay. john harwood, we'll leave it there. thank you for that. we should also note in the next hour, we'll be talking to nbc's richard engel. at 8:25 eastern time, senator john mccain will join us to try to help us understand what the view is from washington. coming up, all this is viewed in the prism of the global market response, that's what we do. and we'll have one trader's perspective on that it could mean when we return. alert.

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all right, welcome back. the tensions over syria pushing crude to the highest level in more than two years. from new york, as kathie lee, bk asset management, nice to see you again. >> great to be on. >> what is the risk premium now on the price of oil? >> i think you're seeing quite a bit of, you know, traders positioning for heightened unsiu uncertainty in certain areas. whether or not we're going to see further gains i think is really contingent upon whether the obama administration shapes this to be a limited military attack or something like a broader scope. >> what is your best guess at this point. what are traders more likely to place their bets on? >> if you look at the movements

across the global market, not just in oil, but also in the u.s. dollar, i think there is apprehension about the scope of the military strike that we're going to see. because if you look at the positioning of the obama administration, they really want to concentrate their efforts on attacking the military units that can carry out chemical attacks versus the specific chemical units themselves. i think here what we can see is an attack that lasts maybe only two or three days at the most. i think it is quite clear they don't want to change the regime at this stage. so that could lead to a little bit of a backup in some of the movements we have seen already. >> right. a wider strike leads to a much bigger move in the price of crude. i've seen anywhere from $10 to $25 in terms of what the risk premium may be. let's steer your attention to the currencies. the emerging market currencies continue to get ripped apart and most specifically the rupee. >> right.

that's where the interesting price action is happening. you've seen quite a bit of u.s. dollar strength against emerging market currencies. and countries with significant amounts of current account deficits. so i think the move here isn't over. we have got a little bit of the fear trade coming back into the markets. you don't see as much in the g-10 currencies, but the emerging market currencies are being hit hard. they have domestic policies that are weighing on, you know, investor confidence, investor demand. look at how the rupee is performing, the scope for another 5% move lower in those currencies, and that could lead to a bit of a movement and unwind the carry trade and the y yen as well. >> kathy, thanks so much. >> my pleasure. coming up, a number of media sites shut down yesterday, hackers supporting the syrian government claiming responsibility. we'll talk to an anti-terrorism expert. that's next. [ male announcer ] here at optionsxpress, our clients really seem

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let's talk more about this attack and other attacks, twitter, by the way, also potentially brought down by the same group. and let's talk about what all of this means with nbc news terrorism analyst roger cressey. roger, explain what happened, first of all, just so we understand, because this didn't just impact the new york times. it impacted twitter and several

others, apparently through what is called a dns attack. >> yeah, so the domain name serv server, when you use your keyboard, and go to cnbc.com, well, there is a dns that is used in order to route people to that specific website. and what happened here was the dns was taken over, the domain name register, the new york times was accessed and the syrian electronic army was able to redirect traffic to a different website or to compromise the new york times website. they didn't get into the new york times internal network at all, andrew, but, again, it is one of these external attacks that you see groups like the sca or during the financial services attack last october. >> not getting into the servers, for example, of twitter or the times. if not, whose server are they manipulating? >> the dns is being held by a third party in the case of the new york times, i think melbourne i.t. and they're able to access that. there is a security issue here

being compromised and what the new york times and others are going to say, hey, the folks holding our dns need to do a better job on their external security front. >> and the syrian electronic army, we believe, is connected to whom exactly? >> well, one of these pro patriotic groups aligned with the syrian government. it always has been unclear whether or not they're directed by the syrian government. most people believe they're not. but they're sympathetic towards them. they launched a series of attacks. in support of assad and his regime. >> and, just so we understand, you know, we keep hearing about all sorts of issues online where sites are going down regularly now, amazon had its own problems just a week ago that was not an attack, it was something else. but is there a way electronically to really protect against this, are we really quite vulnerable across the

board? >> anytime you -- there is two types of attacks here. the one is the denial of service attack, where basically they flood a specific website, an ip address to the point where you can access it. we're always vulnerable to that. companies try to take a series of steps to black hole that type of traffic. so the websites stay up. what you see is that there are a variety of steps that these attackers are taking, that at the very least cause minimum disruption, and that the max takes websites aft s off line f extended period of time. >> what do you think the message is here? if you look at the times or twitter or any of these organizations, what do you think -- what is the message they're trying to send beyond we can do this? >> so, that's one message, andrew. the second message is we're going to create this type of annoyance. this is an annoyance. if they go after critical infrastructure, i would be far more worried, but they're not doing that. >> that leads to the question, why not? if they can do this, why -- i get the we're just showing you how vulnerable your system is and we can do this. why are we not seeing them do

more? >> well, because frankly they don't have the capability as a group. if you get to the nation state level, the russias, the chinas, they, of course, have looked at our critical infrastructure and that is certainly vulnerable. the message is we can do this, we can annoy you and for a variety of media sites and other organizations, they have to pay particular attention to their external security right now. >> okay, roger, we'll leave it there. thank you for joining us and your perspective on this issue. >> you bet. >> appreciate it. i was, by the way, on a couple of these sites, even the past -- this morning, and got access to -- the new york times is coming up for me now but twitter was down. >> don't you think it is a matter of time before their capabilities to do more damage -- >> it sounds like the chinese and the russians already can and this is more of just a let us give you the middle finger to prove, you know, that we can play the game. anyway. >> coming up, oil prices rising on fears of about syria and possible u.s. strike. we're going to talk about the

global markets next. at 8:20 eastern, a perspective on washington's response. senator john mccain has been outspoken on all of this. he'll be our special guest. i hav e low testosterone. there, i said it. see, i knew testosterone could affect sex drive, but not energy or even my mood. that's when i talked with my doctor. he gave me some blood tests... showed it was low t. that's it. it was a number. [ male announcer ] today, men with low t have androgel 1.62% testosterone gel. the #1 prescribed topical testosterone replacement therapy increases testosterone when used daily. women and children should avoid contact with application sites. discontinue androgel and call your doctor if you see unexpected signs of early puberty in a child, or signs in a woman, which may include changes in body hair or a large increase in acne,

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good morning. welcome back to "squawk box." take a look at futures this morning because we do have some green arrows, the dow could open up 3 points higher. the nasdaq about 4 points. but we should note of course that the s&p 500, nasdaq, had

their worst day in over two months yesterday so we're coming out of some red arrows. >> let's talk about the latest in syria. we're going to be able to talk to john mccain, also richard engle is going to join us again. we give him more time than he gets, you know, they got to do things quickly. we can talk to him which makes it amazing. he's something. u.n. enjoy to syria suggests that chemical substance was used in the attack last week killing hundreds and that follows a u.s. declaration allowing the use of chemical weapons without response presents a challenge to national security. you figure they'd know by now what it was. what i was reading yesterday -- hideous, combination of sarin, mustard gas and the x. and people said it sounded like a pepsi can opening.

like a water tank exploding. that's what the people heard at 2:00 a.m. in the morning. senior u.s. officials tell nbc news the u.s. could hit the country with missile strikes as early as tomorrow. britain will put forward a resolution today to the u.n. security council condemning syria, nbc's richard engle is in turkey along with syrian border, he will join us as i alluded to in a couple minutes. he files reports where he is talking to rebel leaders about what their next moves are. probably has interesting things to say. >> i'm sure. following other stories, a number of media companies lost control of their websites yesterday after hackers supporting the syrian government breached an internet company that manages many major site addresses. the hacked companies include new york times, twitter and the "huffington post." elsewhere in the headlines we have reports saying that the u.s. housing authorities are seeking at least $6 billion from jpmorgan chase to settle

lawsuits over bonds, the fhfasued the bank saying they misrepresented how well they investigated the safety of the underlying mortgages. >> also this morning casino operator las vegas sands, they are going to pay more than $47 million to settle a u.s. treasury investigation into anti-money laundering practices, authorities charged the company with failure to alert them to suspicious deposits. shock about what happens there. as expected the government has requested a march trial date in the case opposing the merger of american airlines and u.s. airways, the airline wants a november -- the airlines want a november date saying the justice department has already been looking into the deal for 16 months, and had plenty of time to prepare its case, if it does by the way go into march, will make it much tougher for american to get its way out of

bankruptcicy. stocks selling off on tuesday as we discussed with the dow sliding 170 points. let's get to our guest host, senior columnist and joining him is the chief economist at ubs investment research. good morning. so is this sell-off a great opportunity to buy, mr. santoli, or is this the beginning of what's going to be two or three horrible awful everything months? >> i don't know it's a fat pitch to say we've got tune that point where it's as deep as it's going to go. it's obvious to buy it. i do think that the syria thing has been getting ploybl a little more credit or blame for what's gone on. it's one more unexpected reason to step back from the markets. >> we were talking about this the last hour. u.s. strike could put the nation in war. >> that's why you have all of these volatile players that makes a lot of sense.

the dow stocks have been for sale heavily for three weeks, really. they were not looking good for three weeks, a lot of them looking broken so i think you had the market back on its heels already and this with the oil markets as the transmission mechanism, you know, one more reason to back away. i think you also have this element of so many people playing this rally in the latter stages, one of the reasons was you can't get them down. this market won't back off. now it's backed off so that's off the table. >> maury, when the clients call what do you say? is that if you are a long-term invest ter you want to stay in the stock market. that it's impossible to predict these types of events, you have to look beyond the valley. at uvs we have confidence in the future of the u.s. economy. no one can predict how this crisis is going to end in the near term but ultimately the market's going to be determined fundamentals and economics, we

believe we're going to have close to 3% gdp growth next year. you sit tight. unless you're a trader. for investors you sit tight. >> what about the volatility issue given that we're walking into september with a lot of unknowns still out there and i didn't even -- i mentioned syria, i mentioned the taper, haven't mentioned whether we get yellen or summers. we have that. we have europe. >> debt ceiling. >> if you had cash sitting on the sideline do you put some to work or say i'm going to watch where this lands snirs. >> if you are a long term inv t investor it's probably best to start to wade in now. you want to keep some of your powder dry. but if you've got confidence in the long term economy, these historically have been buying occasions. >> what about commodities? that's the other question. we had a huge run here. >> well, in terms of precious metals especially. to me, you know, a very powerful maybe bear market rally in gold.

i don't know if there is a way to handicap it. the emerging markets to me is almost the key. in other words, is if carnage going to create anything where our credit markets, if it doesn't i think we're okay here. >> you've been an emerging markets bull if i recall, maybe on your program or on "closing bell" a month ago. >> sure. because the performance spread had gotten too wide with u.s. versus emerging markets so i did think so. interestingly, china is not actually bearing the brunt now of this current sell-off. >> southeast asia. i don't think anybody saw the carnage to the level that we're seeing it coming. in the emerging markets. it has been dramatic. >> from the talk of taper. we haven't even tapered. it's the idea that money won't be so free to go. >> maury, i hope you're right because the fed has this notion that everything's going along,

as clock work. unemployment's going to come down, we're going to go from a 2% gdp world to 3% gdp world that's going to allow us to finally exit all of this accommodation. my biggest fear is that things don't go according to plan. i mean, we've had a 5-year recovery. recessions do happen when you least expect them. we got 110 on oil, you just feel confident that the economy is in an upward trajectory, there is nothing that's going to cause that -- because think if the fed can't do what it wants to do because unemployment stops coming down or we stay below 2%, then we're stuck here forever. >> i think the thing you would worry about and i would worry about, if oil remained high for a while. a spike doesn't -- isn't going to hurt you that much. what you worry about is sustained increases in oil prices. >> everything else is going well. durable goods, what happened. you figure employment's going to continue to get better.

i mean, we just highlighted europe and emerging markets. why is the economy you know, housing with interest rates moving up that might not be as strong as we thought. why are we sure that the economy is in an upward trajectory? >> i think the question people ask me most is about the housing, and at this point there is a shortage of homes for sale. there's problems building enough homes. the prices are still going up pretty fast. but, for the time being you have limited supplies which are simply going to limit how much you sell. i think what's more important and what gets overlooked is that the fed has already pumped in a tremendous amount of liquidity in the system, the banks are easing lending standards, bank loans are going up again. this is a long process, but it's under way. >> i hope you're right. hopefully that money is out there and will get used. they aren't even talking about taking it back, just stopping

the adding. >> just to add on. maury, you're talking about the market broadly. is there any place you want to be overweight or significantly underweight given all of the discussion we're having here? >> well, i'll tell you what our analysts are saying in europe is that europe looks pretty good right now. possibly that's one place you might look. >> okay. we're going to leave it there. maury, mike, thank you. you're going to stick around the rest of the program. >> that's your view, too, that things go, we're on an upward trajectory? >> i think that's the default mode but it's fragile. if the fed wants to go slowly it probably should start earlier. if the economy is fragile we go to 70 billion a month we're in more trouble than i think most people would think. >> they would hit to go back up. >> when have they been early in tightening or backing off. >> you know about 94, you know about being early. >> i know about being early. they have been early before.

>> i don't know if people understand. he's not talking that kind of early, by the way. >> coming up -- >> doesn't matter. >> getting to work early? talking is there going to be another awkward moment. >> the first hour. what's different about today's show? you're here. coming up, back to seriousness, u.s. intervention could be a disaster for the region. richard engle is going to have more on the details on the situation there and the possibility of military action. later we were talking about emerging markets. leah zel, that's her bailiwick. she will join us at 7:40. [ male announcer ] i've seen incredible things.

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welcome back to "squawk box." checking the futures now we do have green arrows but we'll call that marginal. dow jones up. the s&p 500 call it almost up a half point after a tough day yesterday. >> a team of united nations inspectors arriving at the scene of an alleged chemical weapons strike. richard engle joins us from turkey. along the syrian border, richard. so many facets to talk about. i'll start with something that the journal put forth. i don't know if you've seen it but the journal's take is that

when you leak that it's going to be a limited strike of two or three days, that sends a signal to assad that he needs to hunker down, then it will be over and go back to business as usual. was that a mistake that's how we're playing this? >> well, i think the united states is trying to respond but also limit the impact, so there is an inherent contradiction in this mission. normally, military operations are secret. you have the element of surprise and then you attack. the u.s. is telegraphing this almost telling the world when it's going to happen, the kind of targets that are going to be hit because they don't want assad or iran or hezbollah to overreact. almost saying listen, we're going to hit you, take your licks and don't create a regional war. it's a very different kind of military action than, well, ones that i've seen in this region. >> richard, you meet with the

opposition from time to time. i was making the point earlier normally if someone, if you know someone has used gas or chemical weapons on their own people, that you wouldn't be tip toeing around the regime change issue, that maybe you would feel more comfortable trying to sway things in the rebels' favor. maybe there are some things we could do in a limited engagement that might tip the balance in favor of the rebels. are the factions, certain factions in the rebel, is it so odious to us whether it's al qaeda or something else that we feel like we have to remain neutral with the guy who gases his own people? >> that's a very good question. i've been speaking to different rebel movements, and the one rebel movement of the united states backs and likes and would very much like to see in power is the pre-syrian army. it is a mostly secular group, it does have some alliances with

islamist groups, it is reasonable, the same group that john mccain went in to visit, the group that he wants to see in power absolutely and is rooting for. but they are one of many groups on the ground. and this is the balance. i think why the united states is really tip toeing around this issue. if you do nothing at all, then you are letting the bashar al assad regime get away with the worst war crime in decades, gassing his own people. that send as horrible message about the united states, about the world, about our morality, our ability to say these things won't stand. that's doing nothing. you do little, it's really a slap on the wrist, and history will write that the united states watched this happen but was afraid to wade into the conflict and therefore gave assad a slap on the wrist. he may or may not do chemical attacks again. and other world leaders might look back and say well, assad got a slap on the wrist. if the united states goes far or too far from a strategic

position, the assad regime could start to wobble. the rebels who have told us they are going to launch an offensive to coincide with any western strikes, definitely want to take advantage of this momentum. so if the u.s. goes a little further, assad starts wobbling then what happens. he will fight back, certainly, the rebels will advance. you could start to see the country break apart into different factions of the rebel movements holding one part of the country, the kurds holding one part, the sunni extremists, the presyrian army holding different groups and assad using everything he's got to hold on to what he has. iran could get more involved. hezbollah could start launching rockets in israel. it's in a state of high alert. then you have to wake up the next day and say okay, now syria is truly broken, no one at all is in charge, and what is the world going to do about it? that is the dilemma of not acting and acting just over the

point where you push him into wobbly territory. >> richard, where is saudi arabia really? it sounds like they have been on the fence in some ways doing a lot behind the scenes but not a lot publicly. >> saudi arabia, in this conflict, is absolutely with the rebels, actually they have been recently sending extra ammunition to that group, the presyrian army i was talking about, ak-47s, 14.5 rounds. saudi arabia wants to see bashar al assad gone, they hate his alliance with iran, saudi arabia is fix 8ed with the iranian she night project spreading across the middle east. saudi arabia also has different agendas, it supported the military takeover in egypt, it don't like the muslim brotherhood so saudi arabia is taking a country by country approach. in terms of syria, it's like turkey it definitely wants to see assad go. >> richard, you used the words war crime earlier.

are we getting closer to the point where you think a u.n. authorization is ready to happen, that the rest of the world becomes as outraged over what's happened in syria as the united states appears to be? >> i don't think so. there is supposed to be a u.n. meeting very soon. there are different calls for u.n. authorization before any kind of military strike. i'm not sure if we're going to get that authorization because russia has said that destabilizing syria would be a bad idea. russia doesn't want to see assad go. she an old -- it's an old ally to moscow. and russia is concerned about that second scenario, we have a breakdown of law and order, even more than the breakdown of law and order right now which is probably 80%, but you go into that next 100% of total chaos, russia doesn't want to see that happen. and is backing a dictator who

almost all u.s. officials now seem to be in agreement, committed horrible war crimes. >> the scenario you painted almost sounds like having a really successful operation is almost impossible. sounds like almost anything is going to be lose-lose for the u.s. i mean, is it -- do we definitely need to make a statement? what if we did absolutely nothing since anything that we try to do could end up backfiring. if we did nothing, is that an option? there are some people on the left that think that's what we should do. >> well, doing nothing is a choice. doing nothing is a decision, it is an action. then you have decided actively to tolerate the killing by poison gas in front of cell phone cameras of hundreds of people, including several hundred children. that is a decision, whether the

united states wants to make that decision is not for me to decide. but that is a decision. >> we know what some of these do, whether it's north korea or china. it's the method, the optics and the mode of the atrocity that you know, that dictates it to some extent. i'm not saying that's wrong but it's completely unacceptable but we are back to policing the world for every type of atrocity that we see. there are countries around the world that are seeing this that are like hey, it's none of my business. i think it is america's business, though, that's the thing. >> there are -- well, i think there are actual laws that say that you know, these weapons are illegal, that you could even call them a crime against humanity. that's what the u.n. secretary general described. if we don't stop now what happens in three weeks or a year or in six months according to the remembers say we're going to have another gas attack and not

1,500 or several hundred depending on whose numbers you believe killed in this attack but could be 10 or 15 thousand. use the same argument? >> we've seen this movie before, appeasement isn't usually the best way to go. in world war ii -- so many. >> you want to know what the best -- you know what the best outcome is for the united states perspective, it's costly. it's difficult and hard and its chances of success are not guaranteed. it would be a bombing campaign, full support for the faction that we like, which is the presyrian army, helping them get into power, and negotiated settlement. but that is not a strike. that is a concerted strategy. i'm not sure the united states is going down that road. >> it's good to know there is something that we should do, otherwise we're just like flailing in the dark.

richard engel, thanks for so much time. appreciate it. >> my pleasure. next time vile a market update as well. >> all right. wouldn't surprise me if he did. >> coming up, dennis gartman publisher of the gartman letter, how you should be trading these markets as tension escalates. after a rough day yesterday look at how this morning is shaping up. modest gains is what the implied open would like like on the street. the dow would maybe open about 6, 7 points. [ male announcer ] it's time.

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gold hitting a three-month high, calling on the squawk news line is dennis gartman, the publisher of the gartman letter g. to talk to you. >> good to talk to you. how are you. >> i'm good, thanks. what do we do with this rally in gold? >> clearly the syrian circumstances has made the bid a little more aggressive than it might have been. otherwise, and this is probably one of those times when one takes a look at which countries or which arenas have the greatest amount to lose and it's clearly going to be europe. europe is the one facing the

greater shortage of crude oil, going to be faced with the inability to get oil out of the middle east at the same rate in the past and it is predicated upon syria, given that, to own gold in you'rio terms, gold is under -- is being bid higher, buy gold and sell euros, probably the bet are trade at this moment. >> you are playing equity markets too. you put out your note the other day saying you were buying japan equities at the end of the week you would look at buying u.s. equities. >> i would have, that was before the situations in syria advanced as rapidly as it has. at this point i think better to sit on one's hands. i'm owning a little bit of japanese equity but i'm not going to increase my exposure and that was premature but predicated on circumstances before the syrian situation got

farther out of hand. >> but seems even ex-syria that maybe taking a stab at the u.s. market is fraught with risk given all of the things out there. >> getting up in the morning is fraught with risk, but there are problems. i think it's probably better just to sit by and watch. eventually i want to be a buyer. it is still a bull market in equities, and in bull markets you only have one of three positions, really long, decently long or neutral. i am modestly long. and honestly not all that comfortable. >> bontds, a quick thought with this rally we've seen. largely on the syria question. >> if i'm going to fade a market i'm probably going to fade that market. probably going to fade the rally. getting close to doing so. it's a bear market in the bond market, that's abundantly clear. if the i'm a sell i'm going to be a seller there. i'm getting close. give me a half point rally on the long bond future, a quarter

point in the 10-year and almost certainly i'll be a seller. >> we'll talk to you soon. mike, what do you think about this move in gold? up 20%, dennis gartman think there is is more room. >> possibly given how much damage was done there. to me the big question is one of i guess in hindsight lessons of the big gold rally in the latter stages, an outgrowth of wealth creation. those are the markets that want to be buyers of gold. so i don't know how far it can carry back to the highs. i do think right now it's a complete kind of sentiment flow question as opposed to any genuine supply demand. >> if nothing else maybe the gold rallies a gift to those hoping to hang in, then fade it. maybe it's come back quicker than a lot of people thought. >> i would lean in that direction. >> okay. coming up next, we got arthur brooks,ment of the american enterprise institute stew talk

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welcome back to "squawk box" on cnbc. here are your morning headlines. investors again focused on the situation in syria, and that's been reflected in stock market activity as you know and most definitely in the crude oil markets. crude rising to its highest level in more than two years during this morning's trade. though it's pulled back a bit from its session highs. we're going to get fresh housing market data later this morning. the national association of realtors will issue its july report on pending home sales, that comes at 10:00 a.m. eastern time. it's a measure of home sale contracts signed but not closed. it's expected to show a decline of .9%. the government set to unveil a probably aimed at reducing risk in the mortgage market. rules would require lenders and bond issuers to hold a stake in loans that they bundle and sell. >> the white house considering the response to syria also

getting ready for debt limit, budget battles in september. arthur brooks is the president of the american enterprise institute. good to see you. do you gentlemen at aei try to formulate what type of policy we should be pursuing in this syrian situation? >> sure. we've been talking for years, we've been talking about the fact that our attempt in washington to not have a foreign policy is going to have consequences. you're seeing the fruit of that now. the fact of the matter is that not working seriously in international arenas to try to avoid the situation we've got with china and russia, not trying to root out the folks, the rebels who are more reasonable to our point of view means we've got this terrible sort of bargain between assad, who is really a monster, and what looks to be jihadist thugs, so a lot of our options, i'm sympathetic to the obama regime but not to the way we got here. >> that's an interesting point.

that's right. you got assad versus people that -- i guess it was a british paper or something, on drudge, that does president obama know that he's going to back al qaeda if -- and you know, that's making -- too simplistic, obviously, because there is a rebel. we heard from richard engel and mccain, there is a faction that we could work with, a secular faction that would be preferable to assad. is it possible for us to get involved and have that outcome and somehow swing that outcome? >> we hope so. the researchers here at aei believe that's the case, that we can do a lot more, slirn we can do a lot more than the last year because that would be nothing. however, we have to do something at this point. the obama administration is quite correct, something's got to be done. the irony to say that this is such a moral outrage suddenly, given the fact that 100,000 people have already been killed is a little late to the game.

but there is a lot that probably will be done. there's standoff weapons at the ready from destroyers offshore, and we can really start looking for the people that are more reasonable to our point of view as best we can working for regime change. >> none of the thing we do are done in a vacuum, unfortunately. and objective sensible way, because we've got public opinion after iraq and afghanistan so that's why even though it's gotten to 100,000 there has been no real impetus to do anything. i mean, i sympathize with the whole process, arthur. it seems like a quagmire. we only have so much time. aei is always quick to point out you're not republican, you're not democrat, so this upcoming debt ceiling and budget battle i mean, it's like watching on the republican side there's like a bunch of factions over there. on the left we know, you know,

the obama administration, we know what they want to do. what should both sides be trying to accomplish in september? >> well, the left is going to try to dine out on the fact republicans are in a dangerous situation of basically proving something that insanity is trying to do the same thing over and over hoping for a different result. american public opinion is simply not sympathetic to the idea of shutting down the government, of not lifting the debt ceiling, not paying our debts. the biggest problem that we have, that conservatives have right now is not that they don't have options, the problem is that they are not actually using the right basic philosophy. what they are trying to do again, not with standing the policy battles, fighting against things, this is what americans are really not supporting very much. they are fighting against debt, deficits, regulation, the size of government and i'm down with that. i mean joe, you and i are on the same page what's going on in american public policy and the size of government. however, until conservatives and

republican conservatives can change their basic philosophy against not to fight against things but to fight for people, they are not going to have the right basic orientation to take the case to the american public and start to win again. >> so what -- you wish would happen and what does happen -- what do you think, how is this going to play out? so probably this time they are going to listen and realize that it's probably not a good idea to allow the president to put them in position, again, as the obstructionist bad guys causing the economy to go down. so maybe they will do that. is that what will -- so avoid that, what will they do with the budget in terms of trying to get some entitlement reform or obamacare, what do you expect? >> well, the way that it's going to work for the kntzs, the conservatives want to get a meaningful entitlement reform. the only way it's going to start is start with the staj that says the reason we want entitlement reform is not because we've got a save a boat load of money.

so right now the obama administration is the ones who are for fighting for poor people and old people, and the republicans are fighting against spending money. that's an inherently losing strategy. it should be that beside this fighting for tax reform against obama care et cetera should be doing so entirely looking at the faces of the people that are going to be hurt by these policies and for no other reason. that's if strategy that will lead to reforms and will leave conservatives become more politically victorious. >> i agree with the way he wants to frame the issue and i read the book and we talked about this. i had a different question which is the sort of yellen somers question. i'm sure you probably don't like either choice. but given that those seem to be the choices on the table, which

way -- who would you choose? >> well, the economists here at aei generally prefer janet yellen, she is a steadier hand on the policy. that said, it's not very likely we're going to see radical differences between what's going on, what would happen with them or with bernanke. >> i'm surprised by that. i would have thought you would have been more supportive of larry somers. he had some skepticism around qe. exactly. >> yeah. that said, jimmy who you know, a cnbc contributor he is more supportive of janet yellen. but again, we're talking about some relatively subtle differences. it's not like these are 180-degree differences between fed chairs. >> i tried to come up with different sayings. you can't really say shortest person -- you can't say that. i was using left with the most fingers, can't say.

that believe me. >> you really can't say that. come on. >> so i came up with the highest gpa at delta house. it was 1.2. >> could be the highest at harvard. >> hoover had -- three f's and two c's. i coined that term. i'm sure you're picking between two not very positive choices for aei. arthur, thank you. you always are. see how he does that. not about money, it's not about prosperity, about morality. about earned success. >> coming up we're going to talk emerging markets. they enjoyed steady growth. tensions in syria, now have risk takers moving to safe havens. opportunities abroad. that's coming up next. reminder, today marks the 50th anniversary of the march on washington, dr. martin luther

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we have talked about emerging markets, there has been

hot money as investors position for a fed scaleback and seek safe haven over tensions in syria. leah zell, founder of lizard invest terse and manager of lizard international fund. were you surprised that just the possibility of possibility of tapering would cause such a flux in these markets? did that surprise you? >> i think it's a short-term trigger for what's going on since 2010-2011. we have to remember the chinese market peaked in 2009, so this is a retracement of what had been a terrific performance of emerging markets from about 2003 to 2 -- to the financial crisis. >> will this when it's all said and done be a positive for some of these countries? i've seen people say there was so much fast loose money and some of the structural things that needed to be done weren't

being done, that now it really has to make investment sense to go back in. and that could be good down the road. >> difficult decisions are usually made under pressure. we see that in the united states as well. >> so, where should we go, is it over? we haven't started tapering yet. we haven't started and we've seen what's happened. by the time it starts, by the time the fed starts will it be time to go back and put our toe in the water again? >> first of all, the tapering, the markets usually anticipate so one would presume by the time reality hits, a lot of the market move will be finished. but second of all, there has been a 28% spread as of last friday between the performance of the u.s. market and the emerging markets. 66% of all fresh money has gone into the u.s. market this year.

so, with every headline i think the emerging markets are getting closer to a bottom. >> you obviously look for well-valued companies. where has the value been in all of this capital outflow? >> the emerging market, the msb emerging market index is trading at about 1.6 times value. the u.s. market trading at about 2.4 times book value. so, there are beginning to be pockets of value emerging everywhere, as you noted i am involved or focused on stocks more than on markets specifically. i would say that the high quality consumer stocks have yet to come down in price as much as, say, the commodities or the banks. but we are beginning to see pockets of opportunities and there are markets that we like a lot. >> we love talking about individual issues, so -- >> okay.

>> i like, i think i looked my name up and it comes up, then i can't read what it says about me. which is sort of disconcerting. bidu is a pick. >> it's a large cap stock. it's about a 40 some billion market cap company so hardly unknown. >> that's for sure. it's never really looked back, has it. you buy it as high as it is right now. >> well, when i was on the program in may, we were going to talk about it and that was a great opportunity. i'll tell you, there are three reasons i like it. the first reason is the dominant category killer. the google of china. it has 70% market share, it's a business where scale begets scale so i do not think they will be dislodged. second of all, the reason the stock took a dip earlier, it had -- it's been going through

the transition like google from desk top to mobile and there was skepticism they would succeed but in the last earnings release they announced the 10% of revenues that are coming from mobile and the skepticism subsided. i like it because it's a 20% compounder, both on the revenue and the profit level, the more successful it is, the harder it is for competitors to get an edge. and the chinese language is actually a barrier, it's not so easy to do. >> i'm looking at it now. they are getting better. a lot of these are translated. actually i wish most of this had not been now that i'm reading about myself. how about -- give me a couple of other ones quickly. >> well, korea is a market we like a low lot. i have a korean name for you. the reason we like the korean

market it's between china on one side and japan on the actor. they have a permanent inferiority complex. their mantra is japanese quality and chinese prices, we own a stock that trades in the u.us, it's a conductor company. it went into bankruptcy in 2009 because it had been overledged. it became public so it has the reputational hangover. they are close to samsung electronics and close to all of the asian electronics manufacturers. the ceo is trained at hewle hewlett-packard and ibm, owned a million in shares and options. the stock is $20. trades eight times earnings, does about $1.60 in free cash flow. we think they can get the margins up and get to $3 in a year or two. we like it.

>> mark lazry bought some of the debt there. >> he is obviously a distressed debt investor and was involved. >> thanks. appreciate your time this morning. >> thanks very much for having me on. >> coming up the interview of the morning, senator john mccain, member of the armed services committee to discuss syria and the steps the u.s. is taking. "squawk box" returns after this. yeah. i heard about progressive's "name your price" tool? i guess you can tell them how much you want to pay and it gives you a range of options to choose from. huh? i'm looking at it right now. oh, yeah? yeah. what's the... guest room situation? the "name your price" tool, making the world a little more progressive. ever making the world a little more progressive.

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welcome back. let's look at how the futures are shaping up on wall street. a rough month for stocks as you know. since august 2, the dow's probably down now 5.5 or 6%. maybe we had modest gains and implied earlier, now we have modest losses almost across the board. mortgage apps well 2.5% as rates raise. the average 30-year rate rose 12 basis points to 4.80% t highest level this year. >> coming up, the news maker interview, senator john mccain on syria, immigration, the debt debate, so much more to talk about with that man right there, senator john mccain. another look at the futures. when we made our commitment to the gulf, bp had two big goals:

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the obama administration building a case for military action in syria. we will talk to senator john mccain, he says any action must have lasting impact on the ground. >> the latest from our reporters in the region and analysis from a middle east policy expert from the council on foreign relations. >> and crude oil jumping to its highest in more than two years, we're going to talk to an energy analyst about the impact on gas prices. the third hour of "squawk box" starts right now. welcome back to "squawk box" here on cnbc. i'm joe kernen along with andrew ross sorkin and scott wapner. our guest is mike santoli at yahoo! finance. more from mike. first andrew has your headlines. >> a number of media companies

lost control of their websites yesterday after hackers supporting the syrian government breached an internet company that manages many major web addresses. the companies included "the new york times," twitter and the "huffington post." "the wall street journal" reporting that jpmorgan's fines related to the london whale expected between 500 million and 600 million, the bank is in discussions with various agencies as part of a global settlements. >> a collect on the markets now, u.s. equity futures we said looking at modest losses a moment ago. look at how the u.s. is shaping up. now we're negative across the board. certainly the spector of some sort of military action by the united states in syria seems to be hanging over the market. as well as all of the other issues that are out there as well. fed taper, fed succession, debt ceiling, asian markets negative, somewhat modest in shanghai. the hang seng and the nikkei

selling off. the nikkei falling 1.5%. let's look at how europe fared as well or how it is faring, trading ongoing through. there is the ftse, the dax in germany down 1.5%. >> tensions rising in syria, president obama and the u.s. weighing military intervention. inspectors left their hotel today, they reportedly were headed to a damascus suburb for a new tour of the areas affected in last week's chemical attack. and nbc's iman joins us with more. good morning. >> reporter: good morning. as you mentioned the u.n. inspectors heading out for a second day. they are expected to go back to the site where the alleged chemical weapons attack happened to try to gather more evidence to try and determine whether or not chemical weapons were used. keep in mind their mandate isn't to assign blame, it's to determine if they were used. why is that important?

because later today the united nations security council is expected to vote on a resolution that is being introduced by the british prime minister who announced that the british government will ask the united nations security council for authorization to protect civilians. reading between the lines a lot of people are saying this is an attempt by the u.s. and the uk to get international authorization for a possible military force inside syria. that's important because there has been some criticism that any attempt to try and use military intervention against the syrian regime without approval from the united nations would not be legal, that is why it's going to be a showdown with russia already threatening to veto any resolution that punishes the syrian government but the official findings of that u.n. inspection team on the ground. there is no clear indication whether that u.n. inspection team will have a report that is made public or released by the time the council votes on that

resolution. >> thank you for that report. we appreciate it. we'll talk more about it now, the situation in syria. joining us council on foreign relations, middle eastern studies, fellow ed husain. good morning. it's good to see you. reading some of your thoughts on this and it worries me that you think that really, the one entity that needs to be involved here is russia, and do we know at this point how serious they are in telling us not to do this? i mean, is it going to be possible to broker any peace if russia's not on board? >> the russians are absolute instrumental as you say, the russians have backed the assad regime from the very beginning, unlike u.s. and european support to the assad opposition, the russians have been loyal to the regime. without the russians there is not going to be a peace deal, without the russians there is

not going to be a cease-fire. and it's absolutely crucial some kind of deal behind the scenes that is put in place with the russians and the russians can stop their ongoing support to the assad regime. i don't think we ought to be naive and unrealistic in that it is in russia's interest to maintain the assad regime for as long as it can because in the absence of the syrian regime, russia no longer has the kind of access into the middle east as it did during the height of the cold war. in many ways russia's actions through the assad regime are diplomatic two finger as it were to the u.s. attempts and allies attempts to continue to influence events in the middle east. the real question, of course, is do u.s. strikes in syria make a real difference on the survival ability of the assad regime or not. there is no will power either in the u.s. or the uk to remove the assad regime unless the regime

is removed, any action taken by the u.s. will continue to create blow back and anti-americanism saying the americans have not done enough. if the americans do more what we've seen is the arab league saying no, we don't want the u.s. to be striking syria. so the u.s. is in a difficult position. i think it's best to remove greater u.s. involvement and military activity in syria and allow for the europeans as led by the uk, and the turks and the arabs and with israeli military capability to take a greater role than let the u.s. be on the front line of yet another war in another muslim country in which the white house is not clear what it wants to do. >> do you think that russia is really going to be surprised if we take action? is it feigned outrage? do they not expect this given what we've all seen on the news with the gas attacks? i mean, if we just do it symbolic move and don't oust

assad, will the russians come back to the table? they know we have to do something, don't they? >> yes, but do something -- i think the russians will be prepared to sit on the table regardless. especially through backdoor channels. but the question is, if assad or the syrian government is attacked, then it makes a mockery of the u.s. again in the region for several reasons. one, the more the u.s. says that chemical weapons were used, the greater the chances of people not believing it. secondly, not removing assad leaves him in place, allows him to be the defiant man of the middle east saying i defied the u.s., i defied international authority. much like saddam hussein did. that then delivers real blow to the prestige of the u.s. and risks the u.s. going in again and again. there is no certainty that striking military capabilities in syria now will prevent assad from using chemical weapons in

the future. this symbolic strike creates more difficulties than it involves the challenges that we're facing in syria and especially the u.s. does not get involved and lets the europeans, the turks, the arabs with some support from israeli military capability to attack syria on their doorstep than the u.s. go in. >> you talked about this making a mockery of the u.s. what about a mockery of the u.n. and the role that the u.n. is going to play in this or not play in all of this? >> the u.n. is a mocked institution, people understand the paralysis but the u.n. did not vow to remove assad, the u.n. is not saying that the chemical weapons have been used by the assad regime. the u.s. thus far has made that and therefore the u.s. has greater political capital that is putting on the line when it should not be. to be completely candid, the arab league does not want the u.s. to go ahead and attack syria and on the arab street as

it were, the more the u.s. says chemical weapons were used the more people think we're going back to iraq style allegations. it's wiser for the u.s. not to be involved in a direct way but let others lead. >> how serious do you think we should take iran's threat of a retaliatory strike. teelth in there? >> i think we should take that seriously. we've seen this in 1991 when iraq was attacked by the u.s. and allied forces, saddam hussein attacked tel aviv i think 91 times. i don't think we should take the iranian threats lightly. attacks from hezbollah operatives in lebanon. israel is not immune action we've seen gas masks and the sale go up four fold in the last 48 hours among israelis. and there is a broader concern that what we're trying to do by attacking syria is send a message to iran that any use of chemical weapons or weapons of

mass destruction would not be tolerat tolerated. but if in the process of doing so we incur attacks on the very ally that we're supposed to be protecting, israel, it makes a mockery of the white house strategy and i go back to my initial point. this is not appropriate juncture for the u.s. to get involved in attacking syria but allowing and facilitating for allies of the u.s. in the region to take a greater role. >> you mentioned the man on the street view in the middle east. can you dive a little deeper into that. it's a view we unfortunately don't get. >> we had not considered that side of it. they won't even -- they don't believe at this point that chemical weapons were used and trace it back to the missing chemical weapons in iraq. go ahead. >> there's that. but they also, many of them in neighboring turkey, inside syria, think the recent attack was conducted by al qaeda. they cite the use of al qaeda's chemical weapons use in 2007 in the anbar province.

in may of this year the turks i think gathered sarin gas from an affiliate organization inside syria so there is a view it was not the regime and the u.n. has not confirmed it was the regime. the regime denied. how ever much we detest this it has some support inside and in the wider region the man on the street, the more we here in the u.s. argue it's the regime that used chemical weapons the greater likelihood -- they need to hear it from the arab league, from the united nations, from the iaea and independent authority that can verify. that has not happened. the more jay carney say it's logical and joe biden say it's undeniable, the more we undermine our case because we haven't advanced independent verification of this happening. >> this is the most interesting thing i heard all day. >> hearing this perspective is

interesting and useful. try to put it all together. thank you. appreciate it. appreciate it very much. >> and we do. waiting for a long time for all of these other -- >> here we are, i'm so glad we had that interview. >> here we are. we know it happened, we -- like which gas it was. trying to figure out which division of assad did it and we're just assuming all this, then the arab street which has a totally different perspective. this is a complete mess. what we should do. you heard what his recommendation is, do nothing. >> let europe and the people in nearby countries handle it. >> good luck with that. coming up, the debt appointment. what to expect from housing,

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welcome back. the mot will end with a barrage of economic data including jobless claims, personal spending and the latest on second quarter gdpa. preview what to expect. joining us is ethan harris, bank of america, merrill lynch co-head of global economics research. welcome. >> thank you. >> what's your expectation for the second half? it seems like we're all of a sudden a bit wobbly again if you believe the durable goods report was nasty, even housing could be somewhat of a question here with the way that rates have backed up. >> you got to be a little nervous here. the interest sense of the sector like housing and capital goods spending showing signs of weakness for the third quarter we expect a flat reading on capital spending. and for overall growth for third quarter only looking for 1.7% growth. so i think a fair reading of the data is not that things are collapsing or anything but that we're still kind of stuck in the mud in this 2% economy.

>> the down side risks seem to be increasing almost by the day. >> we've had a bunch of things come up. think about it from the fed's perspective when they meet in september. they could be facing a major geopolitical event in the middle east, we're going to be in the middle of the fiscal impasse in washington as they deal with the debt ceiling. the new budget. and the fed's going to have to look at what's going on with interest sensitive sectors of the economy and how they are dealing with the fear of tapering. so, the fed's going to face a pretty challenging decision at the september meeting. >> how could the case be made in any regard at this point that tapering should begin in september, just give wlan the data has been, what the downside risks are ahead of us. >> i think that the tapering case has been weakening pretty fast in recent weeks. i think you can still argue for tapering on the grounds that it's only a technical adjustment and that the fed isn't removing

a combination in a serious way, just making a minor adjustment now that we're past the worst of the fiscal shock. i think there is a case for it there. i think the fundamental case, going beyond tapering is weak at this point >> the problem, though w that is that you know, even if the taper is small, it marks the beginning of what ultimately will be the end. and that's what has spooked the market. >> yeah. that's why i don't think they are going to do it. i think they are going to come out of the meeting with the same uncertainty at the july meeting where they debated a lot but didn't present any options around they they are going to do it. i think the same thing will happen in cement. the marketed focused on september because they think that's the month where the fed has to go. the fed's message has been ambiguous saying we're going at one of the thex three meetings. i think it makes sense to wait until december until some of these clouds clear and they can

make a more kind of robust decision. you're nigright if you do small taper you're still going to scare the market. i think it's better to wait. >> how does the market react if we wait given that there is some expectation that they won't wait? >> i think the market's already starting to factor a chance they don't do. i would argue a few weeks guy the markets were almost certain the fed would taper. i think you get a rally. certainly the bond market rallies oun the grounds that the fed is not going to be as aggressive as people think. stocks will be a little more uncertain. stock market, you can't figure out whether they like it or don't like it. i think there will be some kind of positive reaction in the stock market as well. >> all of that context, what would the august employment report have to say to actually make it more or less yun must.

>> i think a blow out report would say 250 or something would change the probabilities a lot. it's one number. even if the venerable payroll number isn't everything. i think it's really a question of the comfort level they are going to have at the meeting, not to pay roll number. the more important thing do they go in an environment where risks look high. these things around the budget deficit and geopolitical stuff makes a big difference fofrmt the fed it looks like a confluence of risk factors around the meeting. >> where would you put housing right now? how concerned are you about what's happening in the housing market? be it the drop in mortgage applications and this backup in rates, adjust at a time where the housing market has found its legs. >> i think that the housing

market probably will weather the storm reasonably well. we've had some zinger data like that big drop in new home sales. if you look at the broad range of housing indicators, the market seems to show signs of leveling off. i think we need to wait. the data are not one way or another. >> people love accommodation and we were shocked when they announced that. now all of us want. if they delayed september, there are people that hope that maybe the numbers aren't good enough after that so we could even put off the next one. i mean, you know, did augustine say all right now. did he ever say okay now? i'm ready. i don't think he did. >> the crack be taken away. >> he never did say okay, i'm ready. >> yeah but the fed will. it's a question of whether they believe in the recovery. i think for the equity market

tapering is a good thing. tapering it for reasons we expect which is solid growth, 3% economy, better earnings it's good news that they taper. we're not getting that. >> i'm glad we can assume that's going to happen in the next three or four months. >> i don't think so. i agree. i don't think that's coming. >> coming up -- >> thank you. >> president obama weighing options for a military response. senator john mccain says those strikes must with some impact, a losting impact. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price -- maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity.

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tensions rise in the middle east. president obama weighs responses on the chemical attacks alleged in syria. senator john mccain, armed services committee. i don't know, we've talked about so many facets to all of this this morning, senator. i'm going to harken back to something you said and richard engel said. basically, what we decided on as a group today, there are certain rebels that can be backed and -- talking about the same ones he mentioned you, in fact, richard engel. you met with them. that this should mean something

and if you could swing it in their favor it might actually be a strategy here. is that where you come down on this? >> yes. absolutely. and you could by establishing a safe zone, which you could do fairly easily, and have the general and his people right there, you can get these weapons to the right people. it would require taking out their air. ba shar operates out of about six air fields. cruise missiles, stand-off weaponry as the israelis have shown you can do, we would take out, crater their runways and prevent them from using their air power, get the right weapons to the right people and we can turn this around. it is not that difficult. these are good people, i was in syria with them and to say that we can't get the weapons to right people, frankly, is a cop

out. >> we're tip toeing around the notion of regime change like i don't know, that harkins back to saddam hussein too. i'm amazed that if like we're almost saying if the outcome is that assad stays in power that we're kind of okay with that even though he just gassed his own people. do we know for sure that he gave the go ahead? i hear even some of his divisions aren't completely under his control. do we know that he was complicit in this and gave the go ahead? >> well, he's responsible, obviously. and the irony of all of this or the contradiction is that the president of the united states two years ago said he has to go and yet now we are articulating as loudly, jay carney yesterday, this is not about regime change. the other problem here, my friends, this is where you all come in more heavily, is that this is turning into a regional

conflict. it's spilled over into lebanon -- iraq is unraveling. jordan is teetering on chaos because of this incredible pressure of the refugees. so what does this do, driving up the price of oil. there are economic impacts if this conflict continues to spiral out beyond the borders of syria. and those who think we can contain it within syria, frankly, that's just not what's happening in that part of the world. >> senator, we had a guest on in the last half hour who suggested perhaps that we don't have the moral authority at this moment to go in because we need to hear from the u.n., we need to hear from other countries in the region on this issue. and that if we are -- we were to go in the man on the street wouldn't really be behind us. do you believe that? >> i think it depends on whether

the president of the united states talks directly to the american people and tells them about 100,000 people have been massacred, there are now a million children who are refugees. how -- we've seen the pictures of these bodies lined up. i think the american people would support it, if the only person that can really convince the american people is the president of the united states. but i understand that the american people do not want boots on the ground and there is no scenario i would support with american boots on the ground. >> let me clarify my question. my apologies if i didn't articulate it properly. the issue is that the people on the ground in the middle east, that they don't think that we would have the moral authority to be there. >> well, i think that the people of syria would be more than happy to have us intervene as

that are being massacred as we speak. and by the way, these million children, they are going to take revenge on us because they think we abandoned them as they grow older. but i think that the people in that part of the world dislike bashar assad intensely and many would favor his overthrow. look at the gulf states and others who are supporting the free syrian army. at the same time this has -- iran/saudi arabia, it's grown larger and larger as time has gone by. >> almost made the guy's point, because he was saying that we said there were wmds with saddam hussein and we thought we would be welcomed in iraq too. and it almost sounds like a replay. >> senator, you want to answer that. >> let me say that in iraq there is no doubt there is increased

cynicism because the secretary of state told the world before the u.n. security council there were weapons of mass destruction in iraq and there were not. and the aftermath of our victory there where we were initially welcomed as terribly mishandled all the way for years until we got general petraeus and the surge. all of that, by the way, is now unravgling because we didn't leave a residual force behind. there is a perception in the middle east far worse. the perception in the middle east and i talk to these leader always the time is that there is no american leadership. and that america has basically taken a pass, so therefore, the various actors in the region are adjusting to that reality. that's not good. >> senator, i wanted to return to the economic questions that exist. and you referenced what we're seeing in the oil market now. it almost seems as though from an economic standpoint you're

damned if you do and damned if you don't. oil prices are already going up on threat of military action in syria. then there are some firms concerned that conflict could spill out into other nations that could send oil even much higher if we do go in. >> as you know, better than i do, that iraq is now a major exporter of oil. if iraq die sends into the chaos they are headed toward that will impact the world oil supply. maybe not ours, we are now energy exporters but the world is dependent upon a stable supply of oil. don't worry about the suez canal. it's not going to be closed. that's a straw man. but there certainly could be areas of unrest and of disturbance that would disturb the oil supply and that's one of many implications of this conflict spreading throughout

the region. maybe the price of oil may be a minor one compared to the other challenges we could face. >> there are some in congress this morning saying that the president needs to convene congress and make the case to the american people. you think the president needs to do that or could he just act at this point. >> by the way, we did act in kosovo without the united nations and there is precedence. war power act is one of the most controversial and untested acts of congress ever enacted. and every administration has said that it's unconstitutional but they don't challenge it in court. the war powers act says that congress must be consulted. and exactly how you interpret that is in the eye of the beholder. whether you're in the exclusive or legislative branch. i note both the british and french parliament have been

convened to discuss this issue but i think a proper interpretation of the war powerings act at this time would be consultation would probably be sufficient. >> do you know at this point what any details of what might happen? you know how likely it is that your advice is going to be followed? from where we sit it looks like -- what's sort of leaked is that two to three days of sort of a punitive strike that isn't designed to knock out his air capabilities and isn't designed to swing the conflict one way or the other. they are not planning on doing what you think, are they? >> everything, there have been massive leaks, even statements tomorrow will be, even giving specific dates. i've never seen leaks quite this

abundant about planned military action. no, it's not nearly. and frankly, what was disappointing to me was jay carney's statement this has nothing to do with regime change. the president two years ago said bashar assad must go. i think that the question deserves to be asked of this president, what is our policy in this region as well as our policy in syria, because frankly right now, i do not know what that is. >> senator, can i ask you quickly here as we talk about the region at large and how combustible the entire region appears to be. there is news moving that according to a u.n. nuclear watchdog report that iran has significantly expanded its

uranium enrichment program. can you respond to that news? >> well, do you believe that -- put yourself in the iranian position. we said asaid must go. he's still there. we have abandoned iraq to a large degree. all we talk about is getting out of afghanistan, not what is being left behind. we see jordan on the brink of a real convulsion, renewed strife, sectarian strife in lebanon. what lesson do you think that the iranians would be taking from all of these events in the region. so, it wouldn't surprise me at all, and the president of the united states has said it's unacceptable for the iranians to achieve nuclear weapons, so it's all a matter of credibility and i don't think there is much

there. >> senator mccain, thanks for your time. good to see you as always. >> thank you. >> someone tweeted the other day, in one of the iraq wars there was a "saturday night live." someone said can you give us more details on when the surprise attack was going to occur. one of the questions. it's almost happening again, isn't it. >> with all of this. >> when and where the surprise attack. >> coming up the future of the fed, the impact on the markets and we're going to head to chicago for a look at what traders are watching. take a look at the price of crude. we'll talkan energy analyst about the unrest in the middle east. 6

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welcome back. a check on the markets. rick joins us from chicago. look who is here. steve liesman, it's funny is with us on set, rick. that was a while ago you said no september. >> no september. i did a probability thing.

but yeah, i dropped the odds. i have a somewhat different take again now. i have a -- >> i want to hear. rick, i said if it doesn't happen in september, all these guys are hoping that the numbers are bad between september and november. because augustine never said now. remember he said -- he never did say now. he never did. he never wanted to. right? >> i don't know. it seems like it's more difficult to decide when the fed's going to taper than as senator mccain said to figure out who is friendly in syria. i guess that's much easier. >> both are. >> joe, that was a great interview. we don't want to cover this but do you really think it's so easy, figure out who our friends are in the region? i think there are hundreds of years of history in that region that would dispute that notion. >> there is one group, richard engel met with, i guess the same group, a secular group, syrian

freedom fighter but there are different factions. >> doesn't your american exceptionalism lead to you a mandate america act. if we are different in the world -- you've been on -- >> i know i have. i know. i know. >> that america policing the world -- >> nothing happens -- but nothing happens in a vacuum and we've got the last two situations that we've been through. >> chemical weapons are wrong, it shall not stand. and we act and -- >> what if we say any time, in north korea, you don't think there are things that would cause us to have a regime change there. how about china. can you kill people with bullets, not gas? >> gas and chemical weapons rises to a point that obama shouldn't go to russia because of how russia is acting. i think this is so outrageous from a human and moral point of view there is no choice but to respond and the chips and the

dominos fall where they may. >> if you go -- >> clear moral compass. >> if you see someone use a rifle to will 1,000 people and they line them up you think that's morally different because it's gas? >> i think it's early to have this conversation. i do think it's morally different because it's gas. >> it's all about morality, guys, you nailed it. it's the morality of the fed to protect us in the system, because they have the hue brus to think they can. it's the morality of governments that are heavily armed and militarily expert, that they can recognize the situation to defend or no. we all know and we all can define morality but i guess it's trying to impact your wisdom to affect it that has a question mark. >> see, that's where we disagree a little on government in that government does not have perfect vision of the future or as you are often as you often point out, unintended consequences.

>> revise the past too. >> but that doesn't mean government shouldn't act. >> they are good at acting. they are good at acting. >> doesn't necessarily believe that mds were used and ordered by assad so you know -- >> i spent a little time in the arab world. getting the arab street to recognize what the truth is is a challenge. there's a lot of >> so after jackson i'll have the answer. >> that's what i mean. >> what's that, rick? >> all the stuff i learned there. >> give me a yes or no. do you have the answer to what the fed's going to do? larry somers told you about his plan? >> i haven't talked to larry but i know that everybody thinks that larry is going to be the next chairman. not a lot of people are too happy. >> because he's been the chosen

guy. so much written about larry somers by people that don't have any idea. >> but the people i talk to, the central bankers they don't know more than i do about the political process. they are asking me who is going to be chairman. >> we got to go. coming up, something. something good. [ male announcer ] it's time. time to have new experiences with a familiar keyboard. to update our status without opening an app. to have all our messages in one place.

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level in more than two years. joining us to discuss this john kingston. good morning to you. >> good morning. >> help us a little bit this morning. how high can it go? or frankly, do you think this turns around? >> remember, overnight actually, actually about $2 higher than it was so it's been higher than the number i'm assuming the number you're showing. there is a long history of i hate to say by the rumor but in syria is not a rumor. buy the rumor, sell the fact. it's impossible to imagine cruise missiles go in for two days and this falls. the bigger concern a lot of people look at is not necessarily iran but the spill over into iraq. you had senator mccain talking about the spill into jordan. a spill into iraq is a very real possibility. you've got 10 million barrels a day out of the southern port of basra. that's what the fundamentals are starting to look at. $6 on the -- to the high, on the

prospect of a cruise missile attack which almost certainly is going to happen. you can see a pull back from there. then you do have to worry about this spilling over into one of the biggest exporters. >> how do you even try to gauge what would happen if there was an attack or some kind of missile launch on assad and how long it would take to get back up and running. >> i don't see a missile launch affecting supply. again, you would have to build a model that takes this -- that takes this out to numerous countries to see a supply disruption. if those cruise missiles go in there, there is not going to be impact on supply. this is all built, buying on speculative tension, whatever perm you term you use. i do not see a disruption immediately caused by a cruise missile attack. >> so then my understanding what you're saying is the price is too high now. >> of course i hate to say that.

the fact is the world is a little bit struggling, thank god for the u.s. and canada. you have significant disruptions in libya, nigeria a question of how bad it is. right now it's pretty bad. iraq has not been able to increase production. chinese demand has been rising surprisingly after early this year being flat so there are some fundamentals supporting the price but i think there is a big tension premium in that price right now. >> how big is that tension premium? i think there is a broad assumption the price would be lower. not so much? >> i don't think so. i don't think the fundamental price should be substantially lower. outside of the u.s. and canada and the ability of saudi arabia to put oil on the market you look around at the producing countries and not a lot are in good shape. as a result things have tightened. goldman had a good report out that said that since the end of june, the start of the summer, they think the world stockpiles of crude which were high had diminished quite a bit. and that's not surprising given

everything from political tension like in nigeria, or libya, all the way up to north sea maintenance. it's not been a great summer for supplies. >> john, thank you for your perspective. >> thank you. >> coming up stocks to watch ya to the north sea, and it has not been a great summer for supplies. >> thank you, john for your perspective this morning. >> thank you. stocks to watch ahead of the opening bell, we will check in with jim cramer down there at the new york stock exchange coming up next. maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. a talking car. but i'll tell you what impresses me. a talking train. this ge locomotive can tell you exactly where it is, what it's carrying, while using less fuel.

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welcome back to "squawk box." l let's get down to the new york stock exchange where jim is. and you always keep it at the markets, jim. it is hard today, and hard and a lot of different discussions and ramifications that we have had about syria all morning long, but with the market as a backdrop what do we do? take a sideline view of things for a while? >> well, funny, joe, because i have been very out of sorts this morning and you get up and trying to figure out syria, and absolutely ungamable and don't know what to do and worried about the fed and worried what to pick, ap come in and wonder about the partisan wrangling and in that environment it is tough to say, is this the level to buy procter & gamble or johnson and johnson and so, yeah, when i

feel that way, the logical conclusion as you mentioned is to be sidelined. >> it is not forever. >> well, you are not going the miss anything if you are not in august, and this is looking imminent whatever happens, and it is not going to be a month, i don't think. >> right. i mean, i'm in total agreement, and one of the things where the common sense dictates if you don't have to do anything, don't do it and be a little bit of a sight seer here. i like to come up with something, but i don't want to foment anything. i could argue that gold is good, but i never thought it should be traded and i like it as part of the portfolio, and i see the stocks going up in tesla and so that is a coal market,-- cold m and one of things that you have to throw the hands up and wonder what obama does. >> should we have a regime change because somebody gassed their people?

>> well, i listen to what the senator said and listened to everything that obama says on this, and to me, this is one of this things that we don't know what to do with a regime change, and for who? i am trying to figure out the last few regime guys that if we liked them more than the ones that went out. >> that term is so familiar and chemical weapons -- >> country is tired of war. >> and we had history with that recently, and in each of the countries where we have all of the issues, you know, it is almost like the people that we are not sure whose side we are on, and the ones we want in power are in power and those who are out, we want them out, and maybe we should not figure out what happens or maybe at least not trying to dictate what happens. >> and sometimes we don't know and sometimes as a country, we don't know. we say that poison gas is bad. it is outlawed. well, okay, we put in someone

else who we don't like either? this is sometimes ju you have t know when you have your limitations, and i'm a stock guy and this is too hard. >> i am going to be on the sidelines watching and that is why the presidents start out with jet black hair and end up, you know, looking like they have the white hair over their entire head. >> well put. >> and anyway, jim, see you in a few minutes. >> okay. coming up the guest host is mike santelli from yahoo offense and -- yahoo finance, and we will give him the last word. ♪ ♪ ♪

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welcome back the "squawk box" and our guest host mike santelli who has the last word. >> well, we have a lot to worry about and ooh a lot of people are worried about it, so investor-wise, the incentive is backing off and bullish levels and the makings of a buyable dip. i don't know if we are at that moment, but we have a lot of nervousness filtering into the market than a 5% decline, because of the identifiable sca scary things to be concerned with. >> but is it more scary than the 5% decline after the bernanke speech in july?

>> well, it is fed policy and you have that policy-driven, and now you have the markers identifiable in time, and the fiscal cliff told you that, but it does not last that long. >> see you tomorrow, andrew. >> yes. >> and "squawk on the street" is next, but in the meantime, watch "halftime report with wapner." >> thank you very much. >> thank you very little. good wednesday morning and welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber of the new york stock exchange. after yesterday's bruising, the worst day for the dow in two months, the bulls are trying to hold the line here as we continue to watch for lines of any u.s. action in syria. the spike in oil is very real today. we hit $112 earlier this morning and the highest in more than two years and currently below that level. gold is also near 1420 and closer to 1430